That what matter and is differentiating - it is the relative cost of living in each location. Salary without consideration the living cost, social, retirement and medical benefits does reflect accurate picture. Living cost is driving force and market price for both sides engineers and companies, either in western or eastern locations. Double-increase in salary in eastern location will not increase work productivity twice, on the other side it will make at least 5-times increase in living cost coefficient.

Hey China/India - if you don't keep your wages down, we'll outsource your jobs to Vietnam and Nigeria, where engineers are willing to work for $8k~$10k a year and will be the equivalent of millionaires in their society, where the average wage is $1200 per YEAR.
What goes around, comes around. It's your turn, after a decade of wealth, to get yourselves unemployed via outsourcing and live "the good life" (on credit cards) we American unemployed engineers now enjoy.

If you think the Eastern engineer's salary will be increased to match the US engineer's you are wrong.
It is far more likely the US engineer will see their salaries going down toward the Asian levels.
Wasn't this the globalization goal all along?

Cost of living vs. dollar value of salary explains some of the disparity. However, this is nothing like the disconnect between top management salaries in these countries. In the US, dim witted investors are confused between a company's performance and the management team's. The off shore management teams will eventually prevail because they still value the actual products that are sold and traded. Therefore they value the workforce and creative teams and will grow their own in-house talent. They will be responsible in maintaining their successful teams. Their salaries will go up because they will eventually outproduce us, because we are reducing our productive work force and short changing their potential replacements. The Boeing Dreamliner is an extreme case of managment not taking responsibility for maintaining company talent and outsourcing without any appreciation for the actual work that goes into making something happen. However, it is the tip of the ice berg of corporate America betraying the entire nation by dismantling so much of our creative potential and then looting the profits.

From the California Budget Project's "Making Ends Meet" publication, the basic cost of living for a family of four in California is around 50K assuming you don't save anything, have no unforseen medical expenses, no luxury expenses. Pretax this and you get 80K. On top of this, you need to plan for medical costs, retirement, college tuition for kids, daycare costs for toddlers etc, i.e. costs that people in EU, Japan or China do not normally have, and the figure easily shoots upwards of 120K.

One major thing that the report does not factor in is cost of living. What someone is paid in the US (or other country) vs elsewhere can NEVER be a straight apples to apples comparison.
Yes without a doubt salaries are lower in Asia/India/Mexico etc. but - so is the cost of living there. Having been to Taiwan more times than I care to count I can tell you food and housing is far cheaper there than it is in the USA.
What I would like to see is a truly balanced comparison based on purchasing power of ones paycheck. If that is taken in to account I would be very surprised if it is not equal or at least much closer to parity.

I think it's a mistake to think that there is a sustainable condition that grants US-bourne engineers a distinctive merit that justifies higher salary. There is no barrier between US and Asia to keep technical knowledge and culture from moving. Many tech companies in Asia are staffed and supervised by US-educated engineers and scientists: I know many people I used to work with in Silicon Valley who are now in Asia directing technology and product development. It would be extremely naive to think that junior engineers working with these US exported senior engineers today will not grow to be as competitive as US-grown engineers in the future.